GM to invest $5.4 billion in U.S. plants over next three years

DETROIT (Reuters) - General Motors Co (GM.N) said on Thursday it will spend $5.4 billion over the next three years on its U.S. manufacturing plants to boost production and vehicle quality.

A man walks past a row of General Motors vehicles at a Chevrolet dealership on Woodward Avenue in Detroit, Michigan April 1, 2014. REUTERS/Rebecca Cook

“The common thread among our investments is the focus on product improvements,” GM North American manufacturing chief Cathy Clegg said, adding that the overall investments would create 650 jobs and retain more than 15,000 existing positions.

The announcement comes as GM and the United Auto Workers union gear up for negotiations on a new master contract this fall for roughly 50,000 U.S. hourly workers. UAW leaders have pushed for the Detroit automakers to invest in union-represented factories.

GM has budgeted $9 billion for global capital spending in 2015, up from last year’s $7 billion, to pay for vehicle launches and investments in new technology. It has historically spent about two-thirds of its capital outlay in North America and officials have forecast the same going forward.

GM outlined about $784 million of the investments for three Michigan plants, and said it would give details over the next several months about the remaining $4.6 billion in spending.

The Detroit company said it will spend $520 million on tooling and equipment for new vehicle programs at its Lansing Delta Township assembly plant, $139.5 for a new body shop and stamping facility at pre-production operations in Warren, Michigan, and $124 million at the Pontiac, Michigan, stamping plant, where top executives will make the announcement.

Separately, GM is weighing a $1.3 billion investment in its large SUV plant in Arlington, Texas, that would add 589 jobs.

Local officials have already given approvals for the project, but GM hasn’t confirmed it is making the investment.

GM executives have talked about their desire to eliminate problems at the Texas plant that have held back production of highly profitable big SUVs like the Cadillac Escalade. Most GM truck plants have been running at or near full capacity to meet demand.

Automakers have been wary of adding too much production capacity in North America, and risk undoing gains in pricing power they have achieved since making painful cuts during the financial crisis. GM and rivals have instead pushed to increase output at existing plants using additional shifts, overtime and investments to improve efficiency.